Katsjing! Netflix adds 29m subs in 2018

In reporting its Q4 results, Netflix has revealed it finished 2018 with 139 million paying memberships, up 9 million from quarter start and up 29 million from the beginning of the year.

The SVoD service grew annual revenue 35 per cent to $16 billion in 2018, and nearly doubled operating profits to $1.6 billion, though this was short of Wall St expectations. Netflix said that as expected, Q4 operating margin dipped to 5.2 per cent vs. 7.5 per cent prior year as a result of so many titles launching in the quarter.

Netflix added a record 8.8 million paid memberships (1.5m in the US and 7.3m internationally), higher than its beginning-of-quarter expectation for 7.6 million paid net adds and up 33 per cent year over year. For the full year, paid net adds grew 33 per cent to 29 million vs. the 22 million it added in 2017.

In a Letter to Shareholders, Netflix advises that it changes pricing from time to time as it continues investing in “great” entertainment and improving the overall Netflix experience. “We want to ensure that Netflix is a good value for the money and that our entry price is affordable. We just increased our US prices for new members, as we did in Q4 in Canada and Argentina, and in Japan in Q3. The new pricing in the US will be phased in for existing members over Q1 and Q2, which we anticipate will lift ASP,” it advises, adding that its multi-year plan is to keep significantly growing its content while increasing its revenue faster to expand its operating margins.

In terms of content, Netflix says it is making significant investments in productions all over the world “because we have seen that great stories transcend borders”. For example, Bodyguard (co-produced with BBC One, from ITV Studios) ranks as one of its most enjoyed co-productions. Baby, its second original series from Italy, and The Protector, its first Turkish original series, both saw strong viewing both inside and outside their home countries. All three of these debut seasons from around the world were each enjoyed by over 10 million member households in their first four weeks. Netflix says that a result of its success with original content, it is becoming less focused on second-run programming.

In terms of competition, Netflix notes that in the US, it earns around 10 per cent of television screen time and less than that of mobile screen time. In other countries, it earns a lower percentage of screen time as a result of lower penetration of its service. “We earn consumer screen time, both mobile and television, away from a very broad set of competitors. We compete with (and lose to) Fortnite more than HBO. When YouTube went down globally for a few minutes in October, our viewing and signups spiked for that time. Hulu is small compared to YouTube for viewing time, and they are successful in the US, but non-existent in Canada, which creates a comparison point: our penetration in the two countries is pretty similar. There are thousands of competitors in this highly-fragmented market vying to entertain consumers and low barriers to entry for those with great experiences. Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose. Our focus is not on Disney+, Amazon or others, but on how we can improve our experience for our members.”

TMT analyst Paolo Pescatore described the results as  “a modest quarter to end a mixed year for Netflix,” suggesting that the year ahead will be pivotal. “More providers will be launching SVoD services and they will want to pull their programming off Netflix. Also, expect the likes of Apple to make significant moves in video/TV, leaving the market awash with video services. “Users will be spoilt for choice, maybe a bit too much,” he says.

“Worryingly, the company is burning through a lot of cash. It needs to recoup this by adding customers more quickly, increasing prices or taking on more debt. Therefore, expect price rises in all key markets,” he advises

“Cable and telco partnerships will remain important for further subscriber and revenue growth over the next twelve months,” he says, reflecting Netflix’s comments in its Letter to Shareholders that it is also expanding its bundled offerings which now include: Telefónica in Spain, Comcast and T-Mobile in the US, Sky in the UK and Germany, Free in France, and KDDI in Japan.

According to Josh Krichefski, CEO at MediaCom, Netflix’s growing catalogue of exclusive shows and ongoing push to create original content is clearly reaping rewards, noting that recent hits such as Bird Box and Haunting of Hill House are generating the same buzz as Oscar-winning films. “This is all well and good but it does beg the question of how much longer Netflix can sustain itself without an advertising model, with the likes of Prime Video and NOW TV making up ground quickly. While Netflix currently leads the way in streaming platforms, investing millions and millions into its own content may not be enough to enjoy unbridled success in the future.”

read more here: advanced-television.com

Research: OTT in 64% US homes

Market research and consulting company Parks Associates has released its updated list of the top 10 subscription over-the-top (OTT) video services in the US market, based on estimated number of subscribers. Netflix, Amazon, and Hulu continue to hold the top three slots, with HBO Now and Starz moving into the top five.

1. Netflix
2. Prime Video Users (Amazon Prime)
3. Hulu (SVoD)
4. HBO Now
5. Starz
6. MLB.TV
7. Showtime
8. CBS All Access
9. Sling TV
10. DirecTV Now

“Which company is the leading OTT video subscription service remains a topic of debate,” said Brett Sappington, Senior Director of Research, Parks Associates. “According to our estimates, Amazon has more Prime Members than Netflix has subscribers. However, when you consider only those Prime Members that use Prime Video, Netflix is the largest. Hulu remains the third largest but continues to grow its subscriber base.”

The firm notes the rise of a second tier of OTT video services from services with recognised brands, including several with high profile original content. Online pay-TV services Sling TV and DirecTV NOW round out the top ten, ahead of similar services Hulu with Live TV, YouTube TV, and PlayStation Vue. Online pay TV has been one of the fastest growing segments in the OTT video space, with aggressive marketing by all.

“HBO, Starz, Showtime, and CBS All Access demonstrate the powerful attractiveness of original content through series like Game of Thrones and Star Trek: Discovery,” Sappington said. “This pattern suggests new services such as WarnerMedia’s DC Universe and the forthcoming streaming service from Disney could achieve success quickly.”

The top subscription sports OTT video services are MLB.TV, WWE Network, and ESPN+. MLB.TV continues to lead the sports OTT subscription category, benefiting from its long tenure as a streaming service and popularity among dedicated baseball fans. WWE also has a dedicated fan base and publicly reported having over 1.2 million US subscribers at the end of Q3 2018. ESPN+ is a newcomer to the OTT video marketplace but recently announced that it had exceeded 1 million subscribers.

Additional data from Parks Associates’ OTT Video Market Tracker, which tracks the content offerings, business strategies, and subscription numbers for OTT services in North America:

– OTT video subscription penetration has reached 64 per cent of US broadband households. Over two-thirds subscribe only to one of the top three services, Netflix, Prime Video, or Hulu.
– The online pay-TV audience is similar to the OTT audience—they are younger and quicker to adopt new technologies when compared to traditional pay-TV households.
– Over the past three years, OTT churn rates have gradually fallen each year from 31 per cent of OTT subscriptions cancelled each year in 2015 to 28 per cent in 2018.

read more here: advanced-television.com

Q2 US pay-TV subs fall but OTT prospers

Strategy Analytics’ analysis of US pay-TV subscriber numbers shows Virtual Multichannel Video Programming Distributor (vMVPDs) with 868,000 net adds in Q2 bringing the total number of vMVPD subscribers to 6.73 million, up 119 per cent YoY.

Despite this, overall pay-TV subscribers (cable, satellite, IPTV, vMVPD) fell to 93.78 million, breaking a string of two consecutive quarters of growth, according to a Strategy Analytics’ Television & Media Strategies report, which examined the subscriber bases of 27 public traded and private pay-TV operators, accounting for 97 per cent of all pay-TV subscriptions.

“While the entire vMVPD segment is growing, AT&T’s DirecTV NOW deserves special notice,” said Michael Goodman, Director, Television & Media Strategies, given how rapidly it has grown in a fairly short period of time. If it continues on its current growth trajectory it will overtake Sling TV as the largest vMVPD in early 2019.”

In comparison, Qq 2018 was not particularly kind to legacy pay-TV providers (e.g., cable, satellite, IPTV) as they lost nearly as many subscribers (-973,000) as the prior two quarters combined (-1.16 millio). In Q2 2018, total legacy pay-TV subscriptions fell to 87.05 million, down 3.6 per cent YoY.

“Historically, pay-TV in the US has consisted of cable, satellite, and IPTV; however, the introduction of over-the-top pay-TV services, commonly referred to as vMVPDs, necessitates a change in our thinking,” said Goodman. “What we have commonly referred to as pay-TV (cable, satellite, and IPTV) should now be referred to as legacy pay-TV, while the definition of pay-TV should include vMVPDs.”

read more here: advanced-television.com

Netflix hits new high as subs soar in Q3

For the quarter ended 30 September 2017, Netflix’s global streaming revenue rose 33% year-on-year, driven by a 24% increase in average paid memberships and 7% growth in ASP. Operating income nearly doubled year-over-year to $209 million with a Q3 global operating margin of 7%.

Driving the spike in revenues was a Q3 record of 5.3 million additional global memberships, up 49% annually, a continued result, said the company, of strong appetite for its original series and films, as well as the general increased demand for online video and TV across the world. Year to date net adds of 15.5 million were up 29% versus the same period in 2016. Regionally the company reported 850,000 streaming additions in the US to total 52.77 million out of a global total of 109.25 million. Non-US subscriptions were up 4.45 million in the quarter.

Looking towards the fourth quarter, Netflix forecast global net adds of 6.30 million, 1.25 million in the US and 5.05 million internationally. Even though it acknowledged the recent price rises in key markets, Netflix was confident that the increased revenue over time would help it grow it content offering and continue its global operating margin growth.

Key to growth would be original titles, it said. Netflix www.netflix.com noted that even though it had multi-year deals in place preventing any sudden reduction in content licensing, the long-term trends were clear: its future largely lies in exclusive original content which it says “drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes”. The company’s investment in Netflix originals was over a quarter of its total P&L content budget in 2017 and was set continue to grow.

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https://www.rapidtvnews.com/2017101749294/netflix-hits-new-high-as-subs-soar-in-q3.html#axzz4vkcnaO3t

US pay-TV subs decline by more than 800,000 in Q1 2017

A pick up in speed in traditional multi-channel defections is being cited by research firm Kagan as the prime reason for an estimated loss of 802,000 subscriptions in the first quarter of 2017.

Worryingly, the company’s First Quarter US Multichannel Subscriber Report calculated that this represented a 0.8% decline in what has historically been a strong first three months of the year.

Key drivers of the drop were found to include the impact of new streaming options which, said Kagan, suggests an important component of the loss comes from a shift in platforms within the familiar subscription construct rather than outright cord-cutting. The estimated total of traditional multi-channel subscriptions fell to 97.0 million in the first quarter. Adding estimated subscribers from virtual services including Sling TV, DirecTV Now and PlayStation Vue, brought the combined total subscriptions to a package of live linear channels and on-demand content to 99.2 million.

Assessing how individual platforms performed, Kagan found that cable operators posted their worst first-quarter performance since 2013, losing 188,000 total video customers. Yet this was a smaller loss than posted by direct broadcast satellite (DBS) and telecommunications (telco) competitors.

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https://www.rapidtvnews.com/2017051747248/us-pay-tv-subs-decline-by-more-than-800-000-in-q1-2017.html#axzz4hLFzpvjM